Search

Business in US & Brazil with US Partner & Brazilian Partner

I am an American, living in Brazil. I registered a company (LLC) in Ohio in 2007 and claimed it 2007 & 2008, then inactive in 2009. It is set-up as a single owner.Now, I am registering a company in Brazil. I have a Brazilian partner. Our company represents foreign companies in Brazil. Currently, we have one US company that we represent, but will be adding more soon.

I am not sure of the best way to handle the taxes or how to;lin- the companies together. For example, any commissions are set-up to be deposited in my US account (my primary personal accounts are in the US and my bank does not charge for international wire transfers). I fear that I would have to pay taxes on the entire amount, because it looks like only income for me. I would like to add my partner to the LLC and to the US bank account, but my partner does not have a Social Security number and may not be able to travel to the US for at least several more months. Of the commissions deposited in the account, a portion will remain in the account as our 'US business account', some of the business account money would be sent to a business account in Brazil. Some will be divided 50/50 for my partner and myself. However, any funds wired to Brazil, may also be subject to taxes again in Brazil. I thought that it would be better to leave the US LLC as 'inactive' and only use a business bank account in Brazil, because it would be easier to documented the money coming into Brazil, however, I have many business expenses that need to be claimed on my taxes in the US, so I really cannot just abandon the US LLC.

For me, it seems complicated, but I am sure somebody can provide direction for us.

b2brazil | Window Shopper |
5/1/2013 - 11:45 am

These structures are put together often and the U.S. part is easier than the
Brazilian part. The above advice is good on the U.S. end but you should know
that as you add a parter you will incure accounting costs in order to file a
partnership return and generate Schedule K-1s. I know this response is not
timely, but you can also handle the business deal between yuo and your
partner contractually, although he loses ownership and that protection.

Whenever you bring funds into Brazil as income you will incure taxes. If you
use the funds to capitalize a local company though, there are no taxes. You
need to find a local accountant to navigate this for you. It is done all the
time but it doesnt mean that it's easy (or cheap) to set up...

jbeidle | Contributor |
8/10/2010 - 9:17 pm

If the US bank account is interest bearing you should be able to add your partner and get an ITIN under exception 1(b). I suggest talking to your bank. Also check the W-7 instructions for the 1(b) exception.
I would not change the address of the US company to Brazil. That would be a lot of unnecessary expense, paperwork, etc. You probably would want to operate them completely separate or have one or the other own shares/membership in the other.

NicoleD | Former Moderator |
8/10/2010 - 6:48 am

Sorry, we cannot provide details on registering a business in a country other than the United States.
To obtain an ITIN, you must complete IRS Form W-7, IRS Application for Individual Taxpayer Identification Number (PDF) . The Form W-7 requires documentation substantiating foreign/alien status and true identity for each individual. You may either mail the documentation, along with the Form W-7, to the address shown in the Form W-7 Instructions, present it at IRS walk-in offices, or process your application through an Acceptance Agent authorized by the IRS. Form W-7(SP), Solicitud de Número de Identificación Personal del Contribuyente del Servicio de Impuestos Internos (PDF) is available for use by Spanish speakers.
For more detailed information on ITINs, refer to www.IRS.gov

timdorf | Performer |
8/9/2010 - 9:45 am

I had already looked at getting an ITIN for my partner, however, the W-7 is only to be submitted when my partner files a tax return. It is to accompany the tax return. I will have my partner do this when we file for 2010.
I need to also check to see if I can add my partner without having the ITIN.We registered the business here in Brazil last week. Still not sure if we needed to register a business here or not, or even how the two entities will function together (not wanting to be taxed in both countries). Now, looking to change the US company to a US company with a foreign address. Not even sure if I can do this oif there will be any issues with that.

jbeidle | Contributor |
8/7/2010 - 3:53 am

Have your partner register for an ITIN (individual tax identification number) using form W-7. When you add your partner to the LLC you will need to inform the IRS you are now a partnership or you may want to look at changing to some type of corporation for tax purposes.